By Zsarlene B. Chua
At first there was Birchbox, a renegade beauty box subscription service based in New York that would send a mystery box filled with product samples for $10. When it started in 2010, it was a novelty and it was a way of “navigating a vast range of options” and “trying products without actually buying them (and going bankrupt in the process),” according to its Web site.
While subscription boxes already abounded — offering everything from snacks to arts and crafts and even coffee and tea to subscribers every month — Birchbox was arguably the first to introduce cosmetics and skincare to the mix.
And then others took notice: YouTube beauty vlogger, Michelle Phan, came up with her own subscription box called Ipsy in 2012 and international beauty retail chain, Sephora, did the same with Play! which launched this year.
But it wasn’t only players in the US who saw the potential in this kind of business proposition. In 2012, three subscription beauty boxes launched in the Philippines, two of which cited Birchbox as their main influence.
“I encountered Birchbox… the first subscription box in the US. I had a business before — it’s a clothing line — and I was looking at how-to beauty videos and I came across a YouTube vlogger who was doing an unboxing for Birchbox and I thought that that was a good idea,” Paul Dimafelix, founder and head of partnerships of Saladbox, said during an interview with BusinessWorld on July 28.
“Back then beauty boxes were pretty much unheard of in the Philippines but it was already a trend in other countries. We came across a similar business model in the US, this was Birchbox, the original beauty box,” said Lia Andrea Ramos, CEO of Glamourbox, in a separate interview on Aug. 3.
Aside from Glamourbox and Saladbox, another player in the subscription box service is BDJ Box, whose company, Viviamo, produces the popular Belle du Jour Power Planner. Viviamo did not responded to BusinessWorld’s request for an interview as of press time.
“We were excited by the concept of you get a box but you don’t know what’s inside it. There’s that element of surprise and also [discovery] because you see brands you haven’t yet come across [before],” said Ms. Ramos, explaining that there are so many beauty brands that are generally unavailable in the Philippines.
Much like Birchbox which gathered steam in the first few years it opened — in three and a half years it had 800,000 subscribers with in $96 million in annual sales according to a report published in Fortune in 2014 — local subscription boxes reported similar success (though on a lower scale). Mr. Dimafelix said that within two months of operations he already managed to get his return on investment for Saladbox.
Saladbox currently has 400 regular subscribers while Glamourbox said that it currently has “15,000 users.” Ms. Ramos — she declined to give the exact number of people getting the box — said that her site does not only offer boxes but also functions as an e-commerce beauty site where customers can buy the full sizes of the sample size products they get in the box. This is much like Birchbox which credits 30% of the company’s revenue to the sale of full-sized products.
BUMPS ON THE ROAD
Offering full sizes on site is also in the plans of Saladbox.
Like many start-ups, Birchbox has hit a bump in the road. Recently it had to pare down expansion plans which included a brick-and-mortar store and creating its own products, due to stiffer competition from Ipsy and Sephora Play!, though the struggling brand managed to get a $15-million investment from current investors.
The amount will be used to “tide the company over as it attempts to sprint towards profitability” according to a Fortune report posted on Aug. 2.
“Obviously, 2016 has been a very hard year from many perspectives,” Ms. Beauchamp told news outlet Recode as quoted by Fortune. “But the idea is to be in control of our own destiny, and now we’ll be able to become profitable very soon.”
On the home front, local beauty boxes have also had to hurdle some difficulties to stay in the game while some have had to tweak their business models for survival.
“We had to take a short break last year to re-evaluate things because, if you noticed, we are the only ones who did that monthly thing. BDJ didn’t do that anymore, same goes for Glamourbox. So we had to tailor fit the platform for the Philippine market,” said Mr. Dimafelix.
Both BDJ and Glamourbox eventually decided to curate boxes released irregularly. Glamourbox’s first box for 2016 was the Pixi by Petra, priced at P1,290, which shipped at the end of June, while BDJ Box currently offers an Elizabeth Arden exclusive box priced from P3,750 to P4,500 (depending on the set).
“We started with multi-brand boxes but in the more recent months, brands prefer to do an exclusive box where they get all the marketing mileage. So we adjust the pricing based on what’s inside the box,” Ms. Ramos said.
Glamourbox previously offered its monthly multi-branded boxes at P595 while Saladbox currently offers its monthly subscription box at P500 each for a minimum subscription of three months plus shipping.
Saladbox also said that it will be offering brand-exclusive boxes starting September which will run until December or January.
“Most of the big brands are based in the US so the samples are really there, it’s produced there so the expenses [for US-based beauty boxes] are much lower there than here… That’s one of the challenge that we encountered. And another was with the subscribers, the Filipino market is a bit different — and, I just have to say this, but I think it’s the fault of some boxes: they put in a lot [of products],” Mr. Dimafelix said of the difficulties of the business.
“If you look at Birchbox, they only put in five or six samples inside the box, but some [local] boxes put 12 items inside the box. So [customers] were really kind of used to that and with us, we only put four to five samples. We used the global norm with regards to the quantity of samples because we think it’s four to five for a reason. It’s unsustainable for a box to have [more than five samples], more so for the brands because each product won’t get the attention it deserves,” he added.
“I think it’s why it’s expensive for brands to do sampling here, they do not have sample sizes but from the consumer perspective, it’s actually great because you get to really experience the product and test the product you want to buy. That’s the idea of sampling,” concurred Ms. Ramos.
While Saladbox remains bullish about the monthly subscription model — they recently introduced another category, this time for men priced at P880 per box plus shipping (delivered bi-monthly) and there are plans to create a more premium box in the near future — optimistic that the market will be growing exponentially as they are targeting at least a thousand subscribers by 2017, Glamourbox has decided to evolve.
“What differentiates us from other beauty boxes was that our business model evolved,” Glamourbox’s Ms. Ramos said, explaining that they were a beauty box when they started but soon ventured into an e-commerce site, and then into being actual distributors of foreign beauty brands like Florida-based Ofra and London-based Pixi by Petra.
Aside from an online presence, Glamourbox now has offline kiosks in department stores such as Landmark (Makati and TriNoma), UP Town Center, Metro in Market! Market! and Metro Alabang, and in SM Beauty Stores, featuring products it exclusively distribute.
“What was good about that was we built up our brand’s presence online and then we have retail presence, which is a complement,” she said before adding that the change was brought by the “reaction to the situation.”